Belgium Faces Threat of S&P Downgrade

(Reuters) - Standard & Poor's cut its outlook for Belgian debt to negative on Tuesday, flagging a new risk for money markets as investors weighed prospects of higher borrowing costs for one of the euro zone's most indebted states. If the country's inability to form a government threatened deficit- and debt-reduction goals, S&P said Belgium'S AA+ rating could be downgraded within six months.

The strong warning places Belgium, which has a debt-to-GDP level of almost 100 percent, among the riskier states in a region being pummeled by a debt crisis that has led to bailouts for Greece and Ireland amid concerns Portugal and Spain might need rescuing too.

In the latest in a series of negative rating moves on euro zone states by the three main agencies, S&P said it was lowering the outlook from stable to negative largely because of Belgium's failure to form a new government since elections in June.

Analysts said they were not surprised by S&P's decision, which was a clear sign the country needed to come up with a comprehensive deficit-reduction plan soon. (more)